Write to Dear Susan & Co. at susan@cccsintl.org if you have questions about money, budgeting, creditors or bills. Our trained certified counselors respond to your inquiries and offer answers or solutions based on years of credit counseling experience.

Mortgages

I have fallen behind on the monthly house payment and the mortgage company calls me three or four times a week to ask me when I will send a payment. I have been trying to get them to lower the interest and monthly payments, but they ignore my efforts. I want to rework the loan, but they don't care. Is there anyway I can get HUD involved? Is calling this many times in a week excessive [harassment]? What can I do at this point to get things back in order? They say I owe them approximately $2,000 ASAP. HELP!!! Poncha

Dear Poncha:

Having a mortgage company call and ask you to bring your mortgage loan current would probably not be considered harassment. All they are trying to do is get you to pay so you won't lose your home to foreclosure.

Your trying to get the mortgage company to rework the loan will not succeed. The mortgage company most likely CANNOT rework the loan. The only thing you can do is try to get a new loan at a lower interest rate and at a lower monthly payment. Unless you can refinance your mortgage, you are committed to your present mortgage.

And don't look for HUD to get involved and give you any relief. As a result of legislation enacted by Congress and signed by the President on April 26, 1996, HUD can no longer provide any direct assistance to homeowners who fall behind on their FHA mortgage payments.

Your only recourse is to make arrangements to get current on your house payments or you face the very real possibility that you will lose your house through foreclosure.

Dear Susan & Co.,

I am now going into the 8th month since additional principle payments were mis-applied towards interest on my home mortgage loan. I've been in verbal contact every 1-2 weeks during the last 3 months and I don't seem to be getting resolution. The matter is further complicated by the payoff of the loan during a refinance about three months ago.

Specifically, I've asked for them to provide transaction history showing how the additional payments were corrected. The company has never provided any written acknowledgement of this issue, nor have they ever returned my phone calls.

Please help. Thanks, Kevin

Dear Kevin:

You might try to contact the Department of Housing and Urban Development (HUD), Real Estate Settlement Procedures Act Division, 451 Seventh St, SW, Room 9146, Washington, DC 20410; phone 202-708-4560. This agency handles complaints and provides information regarding real estate loan transactions and borrowers rights under the Real Estate Settlement Procedures Act.

Before you contact this agency determine what type of mortgage loan you have, FHA, VA or conventional? Also who is the mortgage company? This agency will most likely need to know this information before they can determine whether they can assist you or not. Good luck.

Dear Susan & Co.,

A mortgage loan representative has asked me to prepare a "credit explanation letter." While I understand the "concept" of this letter, I'm not quite sure what the "content" should be. And, because this letter will carry such weight with the underwriters, I am looking for suggestions for making this letter "good" in their eyes. Can you provide any tips? Thank you in advance for your consideration.

Sincerely, Hopeful Homeowner

Dear Hopeful:

Apparently you have one or more blemishes on your credit bureau report. What a mortgage company wants to know is what caused you to have the blemish/es. Was it negligence on your part or was it due to circumstance beyond your control.

When giving your comment, be concise and honest. If the circumstances that caused your blemish was beyond your control, give a brief explanation as to what happened and the ultimate steps you took to rectify the situation. If the derogatory notation was due to your negligence, tell them this but also mention you have seen the penalty you have suffered for not maintaining an excellent credit rating and have since striven to pay your bills on time.

Good luck on your pursuit of achieving the American dream of home ownership.

Dear Susan & Co.,

I was divorced 8 years ago in the state of Florida. My ex-wife received the marital home in the property settlement along with responsibility for the payments. She runs consistently late on the mortgages. I am on the original note and the banks won't take me off. Now my new wife and I cannot get a loan to buy a home of our own. I want to take legal action but I don't know what can be done. I have otherwise perfect credit. If my ex hangs on to the house for 15 more years, then that's how long it will take before I can buy a home of my own. Pretty fair, huh? - Ray

Dear Ray:

Unfortunately, you have become a victim in a no-win situation. Let me try explain how "the system" works. What I am about to say is not intended to offend you but just to inform you.

When you and your ex-wife purchased the home, you both signed the mortgage papers stating you both would guarantee that the payments on the house would be made according to the terms of the note. There was nothing in the contract relieving either one of you of this obligation in the event you got a divorce. This is how the mortgage company and future mortgage companies are looking at the situation.

Another unfortunate, and uncontrollable event on your part, is the manner in which your ex makes the house payments will affect your credit rating. You have probably found this out when you tried to get a new mortgage.

As far as I know, there is no legal recourse you can take to resolve this situation. Your only possible way of being able to buy a home would be by assuming an existing mortgage or seeking owner financing. Good luck.

Dear Susan & Co.,

My question is: If according to my mortgage company I'm behind one month which I disagree. But in order to protect our credit I'm willing to pay $200 a month for five month for a total of $1000. Can they force me to pay that amount at once? Can they sue me even if I'm willing to make those payments? Can they foreclosure my house because of this? - Virgilio

Dear Virgilio:

Unless you can prove to the mortgage company you sent, and they received, this payment that they say you are behind, the mortgage company can demand that you pay this payment. The following comments apply if your loan is a conventional loan, as opposed to a FHA or VA guaranteed loan. The mortgage company can force you to pay the total amount at once. They do not necessarily have to accept your plan to pay the past due amount in installments. If you do not pay this past due amount, they can start foreclosing on your house.

If you have a FHA or VA guaranteed loan, you can request a hearing with the FHA or VA to resolve your mortgage delinquency. Otherwise, you must do as the mortgage company demands or you could lose your house to foreclosure.

Dear Susan & Co.,

I am 25 years old, make $30000(gross) between two jobs and have good credit. I want to buy a condo in one year and want my credit profile to be as strong as possible. I've heard that having too much credit can be a negative. I have $54000 available between six major credit cards which I have had in good standing all for between three and seven years. I have no balance on any of them. I paid them all off last month. My question is, should I close some of these out and if so how many? I have had as many as fourteen major credit cards at one time, again all in good standing and have closed eight of them figuring it was a good move. This may sound corny but I've neglected to close the rest due to sentiment because of the longevity of the accounts. Regardless, my major concern is tailoring my credit to obtain a mortgage. I appreciate your advice. Mel

Dear Mel:

If you want your credit profile to be as strong as possible, before applying for a mortgage loan, you need to cancel all but probably one or two of your active credit cards. If you don't, the mortgage company might look at your $54,000 available line of credit as $54,000 against your debt to income ratio calculating it as if you did have $54, 000 in debt. They have been known to do this. They theorize that after you obtain your mortgage, you have the capability of getting $54,000 in debt and you just might be foolish enough to do that so they will figure this amount in when doing their ratio calculations. Therefore, to eliminate that possibility, you need to write to the credit card companies asking them to cancel your credit cards.

Dear Susan & Co.,

Five years ago we were in debt, so we sold our house to pay off our bills. Since then all of our bills have been paid on time. But two years ago we were notified of a tax lien for state taxes from a previous business that went bankrupt. We make monthly payments on this in the amount of two hundred per month. The amount never seems to decrease and the lien is on our credit report. We have been renting a property since we sold our house, and it gets very frustrating paying somebody else's mortgage. Is there any possible way to get a mortgage even though we have the lien. Signed Depressed and Homeless

Dear Depressed and Homeless:

You probably will have difficulty getting a mortgage loan as long as you still have this tax lien outstanding. Most mortgage companies insist all derogatory reports on your credit bureau file be resolved before they consider you for a loan.

What you could do is contact a Realtor and explain your situation to the Realtor. Realtors stay on top of mortgage company requirements to qualify for a loan. The Realtor just might know of a mortgage company that might consider you for a loan despite of your tax lien. It's worth a try. Good luck.

Dear Susan & Co.,

I have applied for a home loan and have to answer several late payments up until 1997. How do I address these (they are on paid accounts) ? I haven't had any adverse trade lines in the past year so I've been told it shouldn't affect our loan, however, I am unsure how to answer these? Armond

Dear Armond:

In your response, be truthful in what you say caused your past late payments. Even if there was no justifiable reason for your being late, state that fact. You can then add that you realized your mistake in judgment and have been current on all your payments for the past year. As the saying goes, "Honesty is the best policy". Good luck.

Dear Susan & Co.,

A year ago I enrolled in the Money Management by Mail program. My previous credit was perfect. I own a home, and the property value has gone up enough that I have enough equity to be able to sell it, pay off my debt and have enough left over to put a down payment on a new house. If I do that will I have trouble getting financing in such a short period of time? If a creditors policy is to leave negative comments on my report for using the program what is the best recourse? have you heard of the creditor or the reporting agency making exceptions and if so under what circumstances? Please write back soon. Sign me "Debt"

Dear Debt:

Each lender has different policies and procedures in qualifying someone for a mortgage loan. What you can do is contact a mortgage company and pose the same questions to them that you have in this inquiry to us. If the original mortgage company you contact can't comply with your request, ask if they can recommend another mortgage lender that might consider your application. To locate a mortgage company, look in your phone company Yellow Pages under Mortgages.

Another course of action is to contact a Realtor. Realtors stay abreast of market conditions and can possibly recommend a mortgage company that would give your application favorable consideration. Good luck on your efforts.

Dear Susan & Co.,

I have been paying my debts to CCCS for about 4 years now and it looks like within the next 2 1/2 years I will have liquidated my consumer debt, I decided, as some accounts are paid off, to send the excess to the accounts that charge the highest interest rate. Is this a good idea or should I be sending the excess money to the accounts charging no interest to pay off those cards faster? Also I would like to buy a house in 3 years or so once my consumer debt is paid off. What, other than paying off the debts to CCCS, should I be doing in the meantime to make myself a better credit risk? Lastly, is it within the realm of possibility for one to buy a home while participating in CCCS? I had resigned myself to waiting till at least my debts were paid off before I start looking for house. Thanks, you provide a great service. JJR

Dear JJR:

Sending excess funds to the creditors with the highest interest rate is your best course of action. This will result in your getting out of debt sooner.

You asked what you can do to make you a better credit risk. You are doing exactly what needs to be done. One of the primary items a mortgage company will look at is your total debt and how you paid your creditors. Your debt is going down, not up, and I assume you have been making your payments on time. These are both pluses.

There is a possibility of your getting a mortgage loan while on CCCS Debt Management Program. What you can do is contact a mortgage company and pose the same questions to them that you have in this inquiry to us. If the original mortgage company you contact can't comply with your request, ask if they can recommend another mortgage lender that might consider your application. To locate a mortgage company, look in your phone company Yellow Pages under Mortgages.

Another course of action is to contact a Realtor. Realtors stay abreast of market conditions and can possibly recommend a mortgage company that would give your application favorable consideration. Good luck on your efforts.

Dear Susan & Co.,

I am almost two months behind on my house payment. Bank America Housing said I have one week to send them a full months payment. (They said they will accept no less) or I need to make other living arrangements. I want very much to get caught up on my house payments but if I could get that much money at one time, I would have already paid it. Any advice? Ann

Dear Ann:

Unfortunately I cannot give you any words of encouragement. As a general rule, once you become two months delinquent on your mortgage, your mortgage company will take steps to foreclose on your house.

This does not mean you will be evicted as soon as they file the necessary foreclosure papers. Depending on what type of loan you have, (FHA, VA, conventional) certain procedures must be followed. These procedures could take from 3 months to more than 6 months before your house is finally foreclosed on. During this time, you will be given an opportunity to become current on your mortgage.

To further guide you, contact your nearest CCCS office to see if they have a housing counseling service that deals with consumers who have delinquent mortgages. To locate the nearest CCCS office, please call 1-800-388-2227. Good luck.

Dear Susan & Co.,

I will be returning back to the states in December and will starting the process of looking for a home. my wife and I intend to expand our family and have a couple of questions for you.

1. what exactly are "points and how are they accumulated?
2. what would the effect of "slow credit" have in being considered for a loan?
3. would a mortgage lender extend our loan to include our debts if they are not of the credit card type.

Dear Martelle:

In answer to your questions:

1. Points is another way of saying percent. In real estate terms they might say you have to pay one point. That means you have to pay 1% of the amount you want to finance.
2. Slow credit could prevent you from getting a mortgage loan approved.
3. No, you cannot include your other debts in with a mortgage loan. Your mortgage loan can be for only a certain amount of the value of the home. No mortgage company will make you a loan for the full value of the house. Instead of combining your debts, you will have to have a down payment in the neighborhood of $5,000 to $10,000 to get into a house.

Dear Susan & Co.,

I am currently involved with CCCS in Minnesota, all my monthly payments have been made on time, including extra payments. I am looking to purchase a home and the mortgage company pulled a credit bureau. One of my accounts in CCCS reported on my bureau that I was involved with CCCS. In order to qualify for my mortgage, that entry about being involved with CCCS has to be removed. When I talked to that creditor, they said that information would stay on my credit bureau for 7 years. What actions can be done to accomplish that. If I drop that account from CCCS? Drop all my accounts from CCCS? Pay the entire balance for that account?

Any information would be greatly appreciated. Sincerely, David

Dear David:

Unfortunately, mortgage companies look at CCCS clients in a negative fashion and we cannot understand why. Here you are trying to do the right thing and you are being condemned. It doesn't make sense.

You have a couple of options:

1. Remove this one account from your Debt Management Program (DMP) and pay on the account yourself. Advise your mortgage company this account is not being paid through CCCS. If you start paying this creditor direct and they still report the account as being involved with CCCS, write to the credit reporting agency disputing this notation. By law any inaccurate information must be remove from your file. If the creditor refuses to remove inaccurate information, you can sue them in any US District Court for willful noncompliance of the Fair Credit Reporting Act.

2. Ask your mortgage company if you drop from CCCS DMP, will they consider you for the mortgage loan. If they say yes, drop from the DMP.

Dear Susan & Co.,

My credit is not good. I have a couple of judgments. All items are paid and I need to wait out the 7 years. I have been adding nothing but positive reports to the report. My question is: My wife has perfect credit. We want to buy a house. Can we use both our incomes and her credit. Thanks, Joseph

Dear Joseph:

When purchasing a house, the mortgage company will need to check both your and your wife's credit. This is required since both of you will be purchasing the house and the title papers will be in both names. You cannot get around this requirement.

Don't be discouraged though. Even though you might have some judgments, a mortgage company might still consider your application, provided the judgments have been taken care of. When you and your wife are ready to start looking at houses, contact a Realtor and explain you past credit problems to the Realtor. The Realtor is there to help you. The Realtor can assess your qualification and advise you of your chances of getting a house financed. Good luck.

Dear Susan & Co.,

My husband are now in a program with CCCS. We will be finished in about 1 1/2 years. Have you ever heard of anybody being able to buy a home that soon after paying of all of their debts? Thanks. Jana

Dear Jana:

Yes, we have heard of people obtaining a home mortgage even while on a CCCS Debt Management Program (DMP). Just because a consumer is on a DMP doesn't necessarily disqualify them from a mortgage loan. What generally disqualifies them is their debt-to-income ration, meaning they have too much debt based on their income.

Once your debt is in line with your income, you should be able to be considered for a mortgage loan for an amount that is in relation to your debt and income.

Dear Susan & Co.,

My husband and I have been married for 3 years now. This is the second marriage for both of us and due to our divorce from our previous marriages, hurt both of our credit.

My ex left me with a couple credit cards that I could not pay off, which in return, damaged my credit history. My husband's ex left him with the same, but he had went through the CCCS and it took him 3 years to clean up his credit. We want to purchase a house but I'm afraid that my past credit will hurt us in getting a loan. I have requested a copy of my credit report from all 3 credit agencies. I think in total, I owe something like $5,000 including my student loans, credit cards. I'm wondering if I should go through CCCS also to help pay of my past debts. If so, once everything is paid off, do you think our chances for buying a home are ok? I'm worried about this. Since he's been through CCCS, we've paid all our bills on time. It's just my past debts that are haunting us right now.

Signed - Lost, Confused and Depressed

Dear LCD:

Yes, please do call CCCS to speak to a counselor. Have copies of your credit bureau reports at ahnd so your counselor can see who you owe and how much you owe. I would strongly suggest you get on CCCS Debt Management Program (DMP), just as your husband did, to clear up these accounts.

If you don't clear up these accounts, the chance of you and your husband getting a mortgage loan in the future will be slim. After you have cleared up these accounts, your chances of getting this mortgage loan will be greatly improved. The mortgage company will want to know what caused these delinquent accounts. You will probably have to write an explanation that it was due to your divorce but you then made arrangements to clear them up. Generally, a mortgage company will consider you for a loan if you have a justifiable reason for the delinquency but then did what you had to do to clear up the situation.

Good luck in your quest to becoming a home owner.

Dear Susan & Co.,

I am writing to you to find out what the policy is on CCCS clients buying a home upon completion of paying off their debt. My husband signed up with CCCS a year or so ago and our debt will be paid off in two years. Can we then be eligible for getting a mortgage at a decent interest rate or will we have to wait another couple of years. We pay all of our bills on time, our credit is not bad, and we save money monthly. I have just been concerned that there is a policy that exists which will make it very difficult for us to purchase a home in two or three years. Can you provide any more information for me? Thank you! jpn

Dear jpn:

Each mortgage company sets their own criteria when considering somebody for a mortgage loan. Once you have completed CCCS Debt Management Program (DMP)and your credit has been reestablished, you should be able to qualify for a mortgage loan.

Prior to your applying for a mortgage, get a copy of your credit bureau file to see that all of your credit is OK. If necessary, your CCCS counselor should be able to assist or advise you on how to do this. Your counselor might also be able to suggest mortgage companies that consider recent DMP graduates. Good luck.

Dear Susan & Co.,

I recently bought a new home, but because of some late payments on some credit cards the interest rate on the home was high. We also had to get a second loan carried by the seller. The mortgage company recommend we refinance with FHA after a year. We got a conventional loan. I owe about 25,000 in credit card debt and barely squeaking by. I feel that if I consolidated my bills I would have a better time at making ends meet. My question is: will FHA refinance my mortgage at a lower rate even though I join CCCS?. Thank you, Joe

Dear Joe:

That is a question I can't give you a specific answer. We have heard that mortgage companies who solicit FHA guaranteed loans are reluctant to consider CCCS clients. You would have to get a more specific answer directly from the mortgage company.

What I suggest you do is call various mortgage companies. Tell them you are considering enrolling in CCCS Debt Management Program and would this hinder your chance of getting an FHA guaranteed loan and see what they say. Good luck.

Dear Susan & Co.,

Last November we moved into a home under a "rent with option to buy" contract. We had to put some money down on this home plus all of our rent payments go to the purchase of this home. My parents gave us the $8000 that we put down. Early last year I was only working part time and my husband got laid off from his job for the winter. We got behind on some bills and now our credit is really damaged even though I have canceled all the credit cards and wrote letters to the creditors explaining the situation. They didn't seem to care. I have consolidated 2 payments, but my husband owes Visa $5500 and they have hiked up our interest rate on that to 20%. I cannot get him to understand that we need to get this paid off. In the meantime, we have to buy this house in September or lose all that we have down on it. We were turned down on a car payment trying to get lower payments. My auto lease is up in October. We are not financing another car right now. My husband is saving to pay cash for one to fix up. I am worried that we cannot get a loan to buy this house. Is there a mortgage company that we can go through that will not charge us high rates in Columbus Ohio? (New Albany, actually) I know that we make enough money to pay these monthly bills, except I do not know how to budget. This is something that I guess I never really learned from my parents. But, I am better than my husband if that says anything! I just feel really stupid not to be able to do this and I just can't tell my husband that. I do need an answer about the mortgage company and I really need to learn to budget. Can you help? Buying a Home

Dear Buying:

Whether in Columbus, Ohio or anyplace else, the interest rate a mortgage company charges depends on a number of factors. The first factor is what is the going rate in the market. Another factor is what are the borrowers qualifications. If your credit isn't perfect, you will have a difficult time getting any mortgage, regardless of the rate. If a mortgage company will consider you for a loan even though you have less than perfect credit, the chances are you will have to put down a larger than normal down payment and the interest rate will be higher than normal. This is the penalty you must pay for not having a good credit rating.

To help you with your budgeting, we have an excellent publication called "Personal Money Management Guide" that offers great tips on budgeting. Email me your mailing address and we will gladly mail you this free book.

Dear Susan & Co.,

My wife and I began to get in way over our heads as far as credit is concerned shortly after our marriage in 1988. We were able to keep up our card payments by "robbing Peter to pay Paul" with additional cards, loans, etc. until 1995, at which time everything seemed to catch up with us all at once. The next two years were one long nightmare of calls from creditors, delinquent payments, even cancellation of card privileges in several instances. With help from family, we've finally managed to get current by paying off several of our cards, getting current on others (even those we are no longer allowed to use), and settling with the card companies at between 65 and 85 percent of the outstanding balance on a few others. We were able to avoid filing for bankruptcy, and we were able to "satisfy" all of our creditors without having any of our accounts charged off or turned over to an outside collection agency.

Our question is this: assuming we are able to avoid further credit problems, can you give us any idea of how long it might be before we are able to think about applying for a loan to purchase a home? We do not currently own a home, and we would expect to make a substantial (20% at least) down payment up front. With our profile, are we being unrealistic in hoping to be able to secure a loan of this sort in a couple of years, assuming we keep our noses clean? What suggestions can you offer that might improve our chances? (Both my wife and I have checking accounts in good standing, and she is still able to use her charge cards, even though she avoids doing so). Aeldridge

Dear Aeldridge:

The first thing you need to do is get a copy of your credit bureau report. There are three primary Credit Reporting Agencies . They are Experian (800) 821-3822, Equifax (800) 685-1111, and Trans Union (800) 888-4213. Call one of them to see what the procedure is for you to get a copy of your credit bureau file and then pursue getting your credit bureau file. Initially it won't be necessary for you to get copies from all three.

Once you have a copy of your report, you can see what blemishes, if any you have on your report. This will determine your ability to get a mortgage loan in the future. All mortgage companies base their final decision on what is shown on your credit bureau file. All blemishes must be cleared up or explained to the mortgage company.

After you get your credit bureau report and have analyzed the report, call various mortgage companies. Tell them what you are trying to do and tell them you have a copy of your credit bureau file. Go over your file with the mortgage company and ask them what are your chances of obtaining a mortgage loan in the near future. Good luck.

Dear Susan & Co.,

My husband and I would like to get rid of several credit cards which we do not use. I have heard that having a large amount of extended credit (even if we do not use it) can be construed unfavorably by lending institutions. We would like to buy a home in about a year and I want to get our credit in shape for the loan application process. We have very good credit, so mostly the "how" of getting rid of empty cards would be beneficial to me. Thank you. Jenna

Dear Jenna:

You are correct in assuming a mortgage company can look unfavorably on a couple having too many credit cards, even though they don't charge regularly on the cards. The mortgage company looks at it as though you can and might charge on the accounts in the near future.

You will need to contact the Customer Service Department of the credit card companies you want to cancel. You can find the phone number on your monthly statement or on the credit card itself. Tell them you want to cancel your credit privileges on the card. Explain you are happy with their service but you need to close out the accounts to help you secure a mortgage loan. You then need to follow up this phone call with a letter explaining what you want to do.

In approximately 30 days, you want to follow up with a phone call to Customer Service. Give them your account number and ask them the status of your account. They should say your account is "Closed at customer's request".

Be sure to get the name of the individual you talk to each time you call. Note the phone number, date, time, and person you talked to on a piece of paper for follow up purposes. When you apply for a mortgage loan, you can give this information to the mortgage loan company, just in case the credit card company didn't notify the credit reporting agencies that you have requested your accounts be closed. Good luck.

Dear Susan & Co.,

Can a forbearance be negotiated for longer then 6 months? I am seriously behind on my mortgage payment. Thanks, Hayden

Dear Hayden:

It all depends on various factors as to whether you can get a forbearance longer than six months. Primarily it depends on the mortgage company and what their specific policy is. Also is it a conventional loan, or FHA or VA insured loan?

I would strongly suggest you call your nearest CCCS office and set an appointment to discuss you situation with a financial counselor. The counselor can give you more specific information on what your options are.

Dear Susan & Co.,

Hi, I'm a 34 year old male with a bad credit history. My question is this, will a mortgage company consider approving me for a loan if I put down a substantial downpayment like 20%.($20,000) I appreciate your time and thank you in advance. G

Dear G:

It's impossible for me to give you a specific answer because each mortgage company has their own policy regarding clients with bad credit. There definitely are mortgage companies that cater to consumers with bad credit but who they are, I'm not totally aware.

I suggest you get out your phone company yellow pages and look under "Mortgages" and start calling various companies. Explain your bad credit and down payment solution to them to see if they would consider you for a loan. If they won't, can they recommend a mortgage company that might consider you.

Dear Susan & Co.,

Hopefully you can help me. My husband and I purchased a home in September, 1997. Is there such a thing as first time homebuyers credit for income tax purposes? Help! I live in Hartsdale, New York. Diana

Dear Diana:

Congratulations on fulfilling a dream of most Americans in buying your own home. To my knowledge there is no credit for first time home buyers for tax purposes.

What you are able to do on your taxes is deduct the mortgage interest and property taxes you pay on your home. Other than these deductions, I'm not aware of any other items you can claim. For further clarification, you will need to consult someone who prepares tax returns for a living.

Dear Susan & Co.,

I received a letter from a local attorney telling me my home is in foreclosure. I am not behind in any payments. I called my mortgage company to inquire about this and the person told me he had no record of my account being in foreclosure and my next payment due was my regular payment. I am not sure what to do next or what type of service you provide. I would rather not spend the money to have a lawyer on my behalf. Any assistance you can provide will be greatly appreciated. Thank you my home is in Texas. Thanks for your help, D.C.

Dear D.C.:

Dear Susan & Co.,

My husband and I had to declare a restructuring (Chapter 13) of our finances two years ago. We would like to refinance our home mortgage because of a balloon in five years. Any suggestions? Arley

Dear Arley:

Mortgage lenders have different categories of loans, depending on their risk. In your case, you may want to consider contacting a mortgage broker or look around yourself for mortgage lenders willing to offer "C Paper" or "D Paper" loans. You might be required to pay a higher interest rate than the current "A Paper" loans, so check to see which lenders are willing to offer the best rates for your situation.

Thanks for writing and good luck on your future plans.

Dear Susan & Co.,

Two years ago, my husband and I declared bankruptcy. It all started when we both took new and so-called good jobs out of state. After we had moved into our dream home and settled in, we discovered that our new jobs were nightmares and the income had been misrepresented. We are now back home and making a good living, but the damage was done. Our credit history was mostly described as perfect before this happened. Please advise us on getting a mortgage with this type of recent credit history. Lisa

Dear Lisa:

Many lenders will take into consideration the reason you filed bankruptcy as long as you meet the other guidelines, such as debt to income ratios and down-payment. You may have to pay a higher interest rate but should be able to obtain a mortgage as long as these criteria are met. Call around and ask some questions. You may be pleasantly surprised!

Thanks for the letter.

Dear Susan & Co.,

I would like information on refinancing a mortgage that is delinquent. Can this be done? I have a rental property that was vacant for a few months which caused the delinquency. I need to bring it up to date or refinance to start fresh. Can you help? Scott

Dear Scott:

Refinancing a delinquent mortgage to bring it current may be an option depending on your circumstances and your mortgage insurer (VA, FHA, etc.). However, the lender can refuse to refinance, and meanwhile your time is running out.

Be aware the mortgage company can accelerate the note, i.e. demand payment of the entire mortgage balance because you missed some monthly payments. Yep. Check your loan documents. It’s in there.

Foreclosure generally begins after 3 missed payments. To keep the property, act now. Some possible solutions:

• A lump sum payment that covers both the delinquent and the current month’s payments and late fees.
• A forbearance agreement that allows you to pay a full and partial payment each month until the note is current. Expect to make a sizable good faith payment first.

Don’t delay, and good luck.

Dear Susan & Co.,

I have just completed the process of consolidating my debt with a non-profit debt consolidation company, Kimberly Credit Counseling. I will be making a single monthly payment of about $565 to cover about $25,000 in unsecured debt (ouch).

I want to purchase a first home. According to the FHA mortgage guidelines, I can have up to 41% of my income assigned to mortgage payment plus all of my other debt. I do meet this criterion now that I've consolidated, but do you know whether the consolidation will disqualify me for mortgage financing through FHA?

I look forward to your reply. Kate

Dear Kate:

Yikes! You have $25,000 in unsecured debt to repay and you want to add a mortgage to the mix? Consolidated or not, a lender has to take that debt load into consideration.

I don't know how Kimberly works with the mortgage industry. CCCS' housing director, Sarah Randel, has worked for three years with mortgage lenders to build understanding of our program. Some lenders now will consider a mortgage loan to CCCS clients on completion of the program or at least with two years of good payment history. Policies and guidelines vary from one institution to another.

Before making another large purchase, why don't you pay down your unsecured debt and concentrate on saving money toward a downpayment and a house maintenance fund? If you can't save some money monthly, then you'll know you can't afford the house payment.

Dear Susan & Co.,

I'm in my late 20's and have been renting apartments since I graduated college 6 years ago. I'm interested in buying a townhome, but don't have a clue where to start educating myself on the process.

I currently have great credit, low or no credit card debt and save $300 in a savings account and $162 for 401K contributions a month. What resources do I have to find out how much of a mortgage on a townhome that I can afford? What else should I do other than rat-holing money for a down payment? How much of a down payment should I expect?

And are the advantages of owning a townhome the same as a home? I know there are association fees that are assessed on townhouse communities. So what else differs from the cost of buying a townhome over a home? Tired of Renting

Dear Tired:

I made several calls thinking surely some agency out there had already made a list of the pros and cons of owning a townhome. Not. If it's any consolation, there are now a number of people out there wondering why they don't have such a list.

But a local Realtor took time from her day, and we brainstormed this list.

1. Think through why you want a townhome. If no yardwork is the reason, remember you can also buy a free standing residence with a small yard.
2. Talk to a Realtor who handles both townhomes and single family residences. Areas to compare: ease of resale, association fees, property taxes, insurance costs and the differences between condos and townhomes.
3. Talk to a couple of townhome owners. Ask them what they like and don't like.
4. Order a catalog listing real estate informational brochures from the Texas A&M Real Estate Center at (409) 845-0369.

Consider visiting a financial planner to make the most of your savings and investments. Thanks for writing. You sure got a lot of people thinking!

Dear Susan & Co.,

A relative is selling her house. I’m not sure I can afford a mortgage on a $160,000 house on an income of $40,000 with almost no down payment ($5,000). Is this do-able? Is there a better solution? How much would a loan payment be per month? Nan

Dear Nan:

When figuring what you can afford, it is wisest to base your spending on your take-home pay, not your gross. You pay the bills with what you bring home.

CCCS recommends no more that 25-28% of your take-home pay be spent for housing. If your take-home is $2500, then your housing should be no more than $700 monthly.

A mortgage lender figures from your gross pay rather than net to determine what you can afford. From the GE Capital Community Homebuyer Book comes this formula: 33% of your monthly gross pay plus 1.5% times your gross to cover taxes and homeowners insurance plus 59% of the original loan amount to cover mortgage insurance. Your current debt payments are also factored into this formula.

The actual monthly loan payment will depend on several factors, some of which are interest, length of the loan and down payment. Don’t forget about closing costs as well.

Once you do some math, it’s pretty easy to figure out how much house you can afford. The relative’s house may be beautiful, but better you own it than it own you.

Dear Susan & Co.,

Help! I’m married, 20-years-old (my husband also). We both have good jobs. I’ve been at the same employer for 1 1/2 years and my husband has been at the same employer for almost three years. Our gross yearly income is $30,000. Weekly gross is $580.00.

We have two major credit cards and owe about $18,000.00 total on both cards. Right now we are currently renting an apartment. We have paid off an acre of land and we want to build a house.

My question is: would a lender consider us for a mortgage loan? How good are our chances? Does age make a difference? I feel that we’re doing very well financially considering how young we are. Thanks for any help/advice you can give. Beth

Dear Beth:

Age cannot be considered as a factor by a lender. That would be discrimination. Crucial areas are employment (at least 12 months) and good credit history. Working from your prequalification information, the lender will draw up a worksheet to determine the size loan for which you qualify. According to a Realtor I spoke with, you might be considered for a $70,000 to $80,000 loan. Your downpayment can range from 3% on up.

But before you ask a lender to prequalify you, prequalify yourselves. Be realistic. You live on your monthly take-home pay, not your gross. List and total all monthly expenses (rent to movies) and subtract that total from your net. What’s left over? Those are the dollars you have available to save toward the downpayment and a fund for home maintenance expenses. When you own, the bugs and plumbing problems are all yours!

Finally, get out your credit card statements and look at the line that reads finance charges. That’s your downpayment money going into someone else’s pocket! Quit charging and double up those payments. Time and money’s a-wastin’!

Best wishes and thanks for writing.

Dear Susan & Co.,

I have a long negative credit history due to not paying loans and credit card bills on time. I haven’t defaulted on any loans and I do not owe money on delinquent accounts.

How do mortgage companies view reports like mine? Can I still get a loan to buy a house? Late But Not Delinquent

Dear Late:

Nothing is absolute and lending practices vary from company to company. But, generally speaking, mortgage lending guidelines require two years of good payment history for a conventional loan and one year for government home loans like VA and FHA. Also, any collection accounts and any moneys owed to the IRS should be paid in full. Student loans should reflect 6 months to a year of regular payments.

So, you’ve got some work ahead of you before you buy a home. Start by getting acquainted with the new lending programs being offered. Call mortgage lenders and ask about those programs, lending guidelines and how they relate to your specific case.

Also, register for a Community Home Buyer workshop through a mortgage lender or by calling CCCS at 1-800-873-2227 X154. You’ll get a wealth of information from the experts.

Meanwhile, open a new account with a creditor and make payments on time. Your credit report is your way of telling your creditors, "If you lend me money, this is what you can expect." So far you’ve told them to expect late payments. This is not good news to creditors, so start making payments on time and send a new message.

Thank you for writing and good luck!